Finding a market for the goods (market research)
Selecting the marketing channels
Negotiations
Pricing
Distribution channels
Order
Contract
Commercial Invoice
Commercial Invoice must include (minimum):
Payment Terms
Mode of Payment
Division of Costs
Details of Carrier
Details of Receiving Party
Details of Buyer
Other Details
For best results use the ECE (Economic Commission for Europe) Standard
Commercial Invoice
Packing List must include (minimum):
Contents of the Packaging (=of the shipment)
If more than one package or outer and inner packing all contents per each
packing and per each package must be detailed separately
Permits and Licenses
Export licenses if needed
Standards certificates
Labeling
Quality control certificates (highest is ISO, such as ISO-9002 or ISO-9000)
Health and phytosanitary certificates
Veterinary certificates
Other permits, licenses and certificates
Service Providers
Marine Transport
Air Transport
Land Transport (lorry, train)
Insurance
Warehousing
Banking and other Financial Services (factoring, forfeiting, etc.)
Airway Bill of Lading (ABL)
(More details later see appendices for samples)
Holder of ABL does not own goods
Air Transport Contract not effected but ABL proof of existence of such
contract, including weight, measurements, number of packages and invoice.
Marine Bill of Lading (MBL)
Proof of receipt of goods in a certain condition
Proof of existence of transport contract
MBL facilitates the transfer of ownership
Negotiable, transferable and assignable
Subject to the Hague conditions and MUST INCLUDE:
- Name and address of sender
- Port of loading and Port of discharge
- Date of lading and place of issuance of bill of lading
- Name of vessel and number of voyage
- Identity marks of cargo
- Description of goods number of packing units, weight, volume
- Condition of goods statement of carrier (if not stated the goods are in
good condition)
- Clean on Board not Foul
Types of Bills of Lading (BL)
Shipped BL Goods are on deck of ship Received for Shipment Prior to loading onto ship Direct BL From origin to destination, transshipment not allowed Ocean Through BL In case of transit involving a few carriers. In such a
case, each carrier imposes its own conditions on each leg of the voyage and for
the limited duration it handles the cargo. Pure Through BL First carrier must transport from port of loading to a
mid-point and is responsible for damages to the goods. Combined Transport BL Pure BL which covers shipment by all means of
transport (sea, air, land). Forwarder BL An agents BL. Issued by an international forwarder. Freight Forwarder BL BLs of the International Forwarders Association
FIATA
Types of Insurance Policies (IP)
The IP is prepared by the insurance agent or the insurance
company.
Open Time IP One time IP, used in air/marine transport. Policy expires
with the completion of the transport (with delivery). Open IP Open or current policy used to insure a number of shipments.
Payment of premium only for actual shipments. Entails a declaration by the
insured to the insurer pertaining to each and every shipment on a pre-determined
basis (ad hoc, weekly, monthly and so on). The rights of the insured party are NOT effected if it BONA FIDE forgot or
had no time to declare to the insurer as per above, or if it gave the insurer a
declaration containing wrong information. The right declaration can be filed
even after the goods are lost or delivered.
Types of Certificates of Origin (CO)
Required by the authorities as a basis for customs duties and
taxes discounts or exemptions under trade agreements.
Some destination require CO per each shipment. Others require CO only for
specific goods. Sometimes the buyer demands a CO.
The exporter sends the CO to the buyer separately or with the goods.
Issued by the Chamber of Commerce, or by the Customs, or by the exporter itself
or by its forwarder in trust. EUR1 To the European Union FORM A To the USA / NAFTA (the customs union of the USA, Canada and
Mexico) CO
Warehouse Receipt proves warehousing of goods in the port area. Needed
prior to commencement of the release of the goods by the customs.
Orders
Inquiry
Indication / Quotation
Order
Firm Order
Acceptance (the order becomes a contract by accepting it)
Revolving Orders are considered contracts
Order through an agent identical to order issued directly by a buyer
(Important: demand from the agent proof of agency or representation, such as a
power of attorney)
Should include:
Price of Goods (including price ex factory, shipment / transport
freight costs, insurance, port taxes and expenses, other taxes, customs costs,
forwarding costs, costs of issuing certificates, permits and licenses) IMPORTANT: Make sure WHO pays WHAT
Specifications of Goods Type of goods, quality, packing, number of
units / quantity per package, packing sub-units IMPORTANT: Prepare a sample for the buyer which will be WORSE than actually
delivered goods.
Quantity and Delivery Terms If it is an on-going (revolving) order get from the buyer a projection of
its purchases in the future. TIME OF DELIVERY IS CRITICAL !!!
Mode and Method of Payment
Transaction Documents - Documents demanded by the authorities (permits, licenses, standards and
quality certificates, veterinary certificates, health certificates, labeling,
etc.)
- Transaction documents (bill of lading, certificate of origin, commercial
invoice and specifications, port and customs clearances, banking documents,
etc.)
Packing, Freight and Insurance Define outer and inner packing and sub-packing (materials, shape, size)
Quantities
Measurements
Quality
IMPORTANT Get freight offers from a few forwarders/carriers and make
sure ALL the components are included in the price quoted!!!
Remember:
All costs, including the insurance premiums, are negotiable.
USE an insurance agent or an insurance expert within your company. Insurance is
a complicated subject and the insurance companies do their best not to pay on
claims.
Proforma Invoice (PI) Is actually an order and constructed as a commercial invoice
But a commercial invoice MUST be provided separately.
Seller sends PI in duplicate (=2 copies)
Buyer signs one copy and returns it to seller
Buyer can prepare order or PI on its letterhead and send it to seller
Must include mode of payment
Sale Contract Use in case of a complicated transaction, the provision of services (or of
goods which contain a service element for example, maintenance or training)
Sole Distributorship Contract In case of doubt, use the ICC (international Chamber of Commerce) Model
Contract (see appendix).
A distributor BUYS the goods and distributes them through a network of
sub-distributors. He participates in advertising, marketing and sale promotion
of the products he distributes. In return, he gets exclusivity for a certain
territory, for a prescribed period of time and under certain terms and
conditions. He does not distribute competing products and he uses a brandname.
An agent get a commission on sales generated through him but does NOT buy the
goods.
The Sole Distributorship contract MUST include:
- Definition of territory and products
- Commitment to act bona fide and with best efforts
- Roles of the distributor
- Non competition clause
- Distributorship and distribution channels
- Fairs, exhibitions, advertising, marketing and sales promotion
- Delivery terms and retail price list
- Sales plan and minimum sales obligations
- Sub-distributors and agents
- Information exchange
- Prices to distributor (distributor price list)
- Sales outside the territory
- Brandnames and Trademarks protection and allowed usage
- Inventories and spare parts levels, maintenance and service
- Exclusivity
- Direct sales (by the supplier in the territory of the distributor)
- Updates and upgrades
- Validity and Expiry of the contract
- Termination of the contract
- Compensation for damages in case of early termination of the contract
- Obligation to return documents and inventory to supplier in case of
termination of the contract
Agency Contract In case of doubt, use the ICC Model Contract (see appendix).
A Del Credere Agent undertakes to compensate the producer / manufacturer if the
buyers (clients) default.
MUST include as a minimum:
- Appointment of the agent by the seller
- First right of refusal regarding new products
- Exclusion of OEM (sale to a third party which rebrands the goods with his own
brand)
- Type of clients the agent may sell to
- Exact geographical definition of the territory
- Exclusivity (or lack of it)
- Bona fide collaboration and commercial fairness
- The roles and functions of the agent
- Endorsement and adoption of orders concluded by the agent with buyers
- No competition clause
- Marketing, advertising, fairs and exhibitions
- Minimal sales targets
- Sub-agency
- Obligation to exchange information
- Financial arrangements (Del Credere, other)
- Trademarks and brandnames
- Complaints of clients and buyers
- Right of seller to sell directly in territory of the agent
- Special clients / buyers
- Fees and commissions and formulas for their calculation
- Right of seller to reject business
- Expiry or termination date or absence thereof
- Survival clauses and unfinished business in case of termination of the
contract
